Sam Smyth: Clegg effect will be at forefront of leaders' minds

Fine Gael's Enda Kenny arrives at Leinster House yesterday for talks on the formation of a coalition governmentLabour's Eamon Gilmore arrives at Leinster House yesterday for talks on the formation of a coalition government

THERE will be no champagne corks popping if Fine Gael and the Labour Party rise to their own and almost everybody's expectations to reach an agreement.

The public would gag at the spectacle of politicians celebrating anything when the IMF and ECB are at the door and the next banking crisis is just around the corner.

Fine Gael will be particularly sensitive to any public displays of triumphalism and the Labour Party will not want to give any hostages to fortune.

The parties currently negotiating a Programme for Government know that mutual and self-congratulation are indulgences only to be practised in private by consenting adults.

Besides, both parties will have watched with interest the formation of the Tory-Lib Dem coalition government in Britain and will be acutely aware of the inevitable compromises that such a coalition calls for.

That Nick Clegg paid a very heavy price for being the equivalent of Tanaiste will not have been lost on Eamon Gilmore.

The leader of the Lib Dems has never really recovered from the climbdown on third-level fees, a U-turn which sparked rioting on the streets and will haunt the party far beyond the next election.

Both Fine Gael and Labour made promises to protect the most vulnerable in society through the election campaign and few would doubt that their intentions were sincere.

But the Olympian scale of an economic crisis linked to a banking calamity by an umbilical cord of sovereign debt will leave the incoming Government with two choices: bad and worse.

In the closing days of the campaign, Mr Gilmore practically signed a pledge in blood: "No cuts in child benefit."

By contrast, Fine Gael said it would reduce child benefit but was not specific. Any such cut could easily be Mr Gilmore's equivalent to Nick Clegg's dilemma on third-level fees.

Ruairi Quinn signed a pledge binding the Labour Party to oppose any new form of third-level fees, including student loans or a graduate tax -- while Fine Gael campaigned for a graduate tax to recoup one-third of a student's fees.

Mr Gilmore might be faced with withdrawing from his manifesto commitment to take two years longer than Fine Gael to reduce the budget deficit to 3pc.

There are many other issues where the parties differ. For instance, water charges -- Fine Gael is in favour and the Labour Party is against.

The Labour Party wants to raise the 13.5pc VAT rate by 1pc and leave the higher rate of VAT untouched, while Fine Gael wants to cut the 13.5pc VAT rate and raise the higher rate.

Commitments

Both parties are very optimistic about putting aside their many differences and reaching an agreement where neither party can claim victory.

But the Labour Party has its own memories of how smaller parties suffer after coalescing with a larger party. It felt the wrath of the electorate for more than a decade after going into government with Fianna Fail in 1992.

The now-defunct PDs and a Green Party with no Dail seats are further examples of what happens when smaller parties share power with a larger partner.

So there will be no champagne and no fizz for anyone in government for the foreseeable future.